The Turmoil: US Federal Reserve, Congress, Current Fiscal Situation, and the Sluggish Recovery

The current fiscal drag is making it difficult for the sluggish recovery to get on a sustainable course by tying hands of fiscal policymakers. It quite evident from the fact that the majority of working population is nearing retirement and that the healthcare costs are spiraling out of control, that now  its nearly out of control of handicapped policymakers to effectively deal with the fiscal situation. This will only worsen in the coming years and we might witness severe economic and financial drag downs.

So the congress should act smart and spend now in order to sustain the recovery process, as once the recovery sets into a self-sustainable mode, they can always pay back the debt later. The vote among republicans on government spending is divided, so Ben Bernanke has material reasons to be worried about the situation. However, he continues to the hold the view that the current financial crisis won’t affect long term growth in US, given we act now and take considerable measures to secure the future.

Fed even assured that if the economy continues to remain week, the Federal Reserve has a range of measures by which they can stimulate the economy. But there is a cost of using each measure, so the Fed will act as and when it is required.

Economy experts are already holding debates over what options the Federal Reserve is left with, and which of those will be most appropriate amid current situation. Let us hope that there never comes the need to exercise additional instruments to stimulate growth and that the economic recovery becomes self-sustaining.